Market Report: Copper-bottomed rally lifts mining sector

Vedanta Resources led the mining sector last night, swinging to first place on the FTSE 100 as the price of copper touched a six-month high.

Copper rallied strongly in early trading as commodity traders took stock of a fall in inventories at warehouses tracked by the London Metal Exchange. Sentiment was also lifted by an overnight rally in prices in Asia, pushing copper for three-month delivery to a high of well over $4,900 a tonne – levels not seen since October – amid talk that China may be stepping up moves to stockpile the metal.

Traders also pointed to a new circular from UBS, which highlighted that China uses a lot more copper than it mines domestically. Vedanta, which was also helped by a Barclays upgrade, was the biggest beneficiary of the rally, gaining 15.4 per cent or 134p to 1,008p. Kazakhmys was up 10.1 per cent or 47.5p to 513.5p while Xstrata climbed to 613.5p, up 7.1 per cent or 41p.

Overall, the FTSE 100 was broadly unchanged, edging up slightly by 5.2 points to 3,988.9, while the FTSE 250 strengthened by 173.2 points to 7,152.1. The benchmark index pared gains as trading commenced on Wall Street, where investors sold on news of an unexpected drop in retail sales. The data, which showed that sales at US retailers fell 1.1 per cent in March, ending a two-month run of gains, dampened the confidence sparked by a better-than-forecast earnings report from Goldman Sachs.

The Goldman results nonetheless supported UK-listed financials, which traded up. Barclays was among the strongest, rising by just over 10 per cent or 18p to 195.5p, with traders attributing the rise to last week's confirmation of the iShares disposal.

Despite the cheer in the market, Société Générale stuck to its bearish stance, reiterating its concerns about the lender's leverage and capital base. "We continue to believe Barclays has a tangible common equity deficit of £15bn-£20bn given the small positive benefit of this transaction," the broker said. "Material further dilution to common equity shareholders is unavoidable, in our view."

In the wider sector, Lloyds Banking Group was 10.5 per cent or 8.4p ahead at 87.9p. Legal & General led the insurers, rising by 11.6 per cent or 5.7p to 54.5p.

Among retailers, Next was broadly flat at 1,405p, up a slight 6p. The stock was added to Goldman's widely followed "conviction buy" list with a 12-month target price of 1,740p. "The shares remain at the lower end of their relative valuation range and we believe offer an opportunity to buy a UK retailer managed prudently and to gain exposure from any outperformance of the UK consumer," the broker said.

On the downside, defensives lost their sheen as investors sought riskier investments in the financial sector. British American Tobacco was the weakest, losing 4.7 per cent 75p to 1495p, while the defence group BAE Systems retreated to 323p, down 4.1 per cent or 14p.

Reed Elsevier, the publishing group, was also on the back foot, easing by 3.2p per cent or 15.2p to 460.25p.

On the second tier, Homeserve, the home emergency and repair services group, underperformed, losing 3.4 per cent or 45p to 1,251p, after Citigroup lowered its recommendation to "hold" from "buy", telling clients that problems in the small emergency repair business was "modestly offsetting" strength in the more important membership business, both in the UK and beyond. "The impairment at [the] emergency repair [division] will force analysts to reconsider their valuation of that business," the broker added, trimming its target for the stock to 1,330p from 1,380p.

Citi was more bullish on Bluebay Asset Management, which was more than 25 per cent or 32.5p heavier at 161.5p after the broker advised investors to buy into the fund manger. Impressed with the company's performance in March – Long/Short funds are up 6 per cent to 9 per cent, according to the broker, while its Long Only Emerging Market funds are 4 per cent to 7 per cent – Citi upped its forecasts for assets under management.

Elsewhere, Inchcape, the car dealership group, surged to 15.25p, up 15 per cent or 2p, with traders attributing the gain to hopes of a possible government car scrappage scheme and some positive comment from Morgan Stanley, which moved the stock to "over-weight" from "equal-weight", partly on account of the company's recent capital raising move. "Inchcape still has to deal with difficult fundamentals in virtually every car market in which it operates," the broker said, "Nevertheless we believe the risk-reward has now moved decisively in its favour."

Among smaller companies, Jarvis Securities strengthened by 16 per cent or 20p to 145p after the stockbroker declared its first interim dividend for 2009, of 3p per share.

The Local Radio Company climbed to 2p, up 33.3 per cent or 0.5p, after John Perriss, the company's independent non-executive director, recommended shareholders reject UKRD's £1.4m bid, as a rival offer by Hallwood, backed by TLR's non-executive chairman Anthony Gumbiner, was more attractive.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
News
i100
News
Budapest, 1989. Sleepware and panties.
newsDavid Hlynsky's images of Soviet Union shop windows shine a light on our consumerist culture
Arts and Entertainment
Eleanor Catton has hit back after being accused of 'treachery' for criticising the government.
books
News
In humans, the ability to regulate the expression of genes through thoughts alone could open up an entirely new avenue for medicine.
science
News
Williams says: 'The reason I got jobs was because they would blow the budget on the big guys - but they only had to pay me the price of a cup of tea'
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee